Markets are called mixed this a.m. behind a choppy mixed
overnight session.
When the overnight session ended old crop corn was off a
penny, new crop corn was up 3 cents, KC wheat was unchanged, MPLS wheat was up
2, CBOT wheat was unchanged, July soybeans were down 3 cents a bushel, and November
soybeans were off ½ cent a bushel. The stock market got hit hard yesterday and as of 8:15 stock market futures
are pointing towards another small loss on the opening with the DOW futures off
about 20 points, crude is up 70 cents a barrel, gold is about unchanged, and
the US dollar is off a couple hundred points with the cash index at about 82.35.
Yesterday was about strong old crop demand and tight old
crop balance sheets. Weather also looked
like it might be providing a window for some areas to finish planting; some
rainfall wasn’t as much as expected and some of the deferred forecasts show some
warm areas as well as some dry areas.
Bottom line is we are in a weather market and really a future weather
market. The market doesn’t seem to care
much what we do or don’t have done; it seems to focus more on what it thinks we
will do based on the weather forecasts.
This should keep us very volatile and choppy; weather can drive us up
one day and sell us off the next. Just
depends on what the market perceives the weather is doing to our crop
size. With the tight old crop balance
sheet we should keep some weather premium in our prices for some time. With the huge amount getting done at once
pollination time for corn will be extra important.
Yesterday we did have ethanol numbers out. Very strong as production increased to its
highest level since about last year at this time. Stocks did bounce but not very much; they are
still as low as they have been since November of 2010. Ethanol stocks are about 2 and half weeks
worth. That tells me that if demand
doesn’t change that if ½ of the ethanol plants shut down this summer that we
run out of ethanol within a couple weeks of the plants shutting down. Most ethanol plants don’t want coverage for Aug/Sept
because of the huge inverse that both the corn board has as well as the ethanol
price inverse. But If supplies or
ethanol stocks get lower what will happen to the ethanol price? Well it shouldn’t go down. If ethanol price rallied would the shut down
plants start back up? They sure might if
margins are good. Keep in mind the
plants have an expense running or not; that’s why many have ran in the red many
times the past couple of years.
Bottom line is the old crop corn tight stock story isn’t
about to be saved in the next few days or even weeks. Same can probably be said with beans. Sure we can import some; but can we get them
to the right spot? Same with ethanol
imports; can we import some? Yes but is
that really bearish if we have to?
News out this a.m. include export sales. Same story as recently strong soybean meal
sales, weak old crop soybean sales, weak old crop corn sales, and weak old crop
wheat sales.
New crop sales where good for wheat at 24.4 million bushels;
that puts us at 228.6 million bushels to start the marketing year versus last
year’s 140.4; keep in mind the USDA has a year over year decrease in wheat
exports. So we are off to a good
pace. But keep in mind weather for the
wheat areas in the world has been good the past 30 days or so. Talk is that wheat crops in other areas are
increasing. Early to say that with much
confidence but that is the talk.
New crop soybeans sales came in at 21.7 million bushels;
which leaves us at 405.9 million new crop on the book. About the same as last year at this time. New crop bean meal sales are also very strong
at 705 th tones so far versus 539 last year at this time.
New crop corn sales were horrible only at 2 million bushels;
giving us a new crop total of 190.7 million; less than the 217.4 that we had a
year ago at this time. Keep in mind here
that the USDA has a big year over year increase.
With the lack of exports that past few weeks some are questioning
if the USDA will drop corn and bean exports.
But most think if that is done we could see soybean crush increased and
ethanol usage increased. I guess we will
find out in a little under a week.
Bottom line is that our exports as of late have not been a reason for
the funds to buy grains. If anything our
export headline screams sell….sell….sell
I did see some Lanworth estimates out for crop sizes. The corn and bean size smaller then the USDA
but much bigger then what the bulls would want to see. Corn at 13.8 billion bushels and beans at 3.4
billion bushels. They think North Dakota
has lost 700k acres.
If they are right not exactly a path to higher prices. It means the job of the market is still to
find demand.
Please give us a call if there is anything we can do for
you.
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